From $20K to $3K and Back: How Bitcoin Price Counters Sentiment in the Crypto Market

During Bitcoin’s widely publicized bull run of 2017 which sucked up retail investors into its massively inflated bubble, the price of the first ever crypto reached a peak of $20,000. Now that the bubble has popped and the market has entered a state of anger and despair, more people than ever are writing obituaries for Bitcoin and calling for extreme lows – the exact opposite of the sentiment witnessed at its all-time high.

While most traders follow technical analysis or look to fundamentals to determine which way Bitcoin price may move next, trading crypto counter to the market’s sentiment may be the best indicator yet for profitable trades.

Crypto Market Sentiment Can Be a Contrarian Indicator

Billionaire investor and finance magnate Warren Buffett has an often cited quote, “Be fearful when others are greedy and be greedy when others are fearful.” The quote is the perfect example of how contrarian trading works, especially when it comes to speculative assets that easily set the stage for bubble-like market cycles.

Sentiment just before Bitcoin’s all-time high was at the peak of the hype and irrational exuberance phase of a market bubble cycle. It wasn’t uncommon to see comments in Reddit’s r/BitcoinMarkets’ daily discussion thread read “no way it doesn’t break $20,000 soon. Very soon.”

Others were calling for astronomical figures such as $100,000, and some simply talked about how the current bull trend couldn’t possibly come to an end. “Every time we’ve consolidated right below/around ath the past year it’s broken up….just saying the trend is still very much up,” one Redditor adorned with a “2013 Veteran flair” added.

Crypto Bear Market Bottom is Hard to Spot During Depression and Anger Phase

Predicting the bottom price of an asset is extremely difficult, and its only further complicated by the emotional state of the market’s participants.

Following Bitcoin’s hype phase, was denial. $6K was repeatedly defended and sentiment swayed back and forth between each Bitcoin price peak and trough. Until support at $6K broke and even permabulls finally turned bearish.

Sentiment has only suffered further since then, as the market clearly entered the depression and anger stage – the complete opposite of the sentiment found in Reddit comments around the December 2017 top.

“Does look like it’s running out of steam and about ready to fall,” one Redditor commented. “Short it. Itz about to double top – or whatever the TA term is for the second peak peaking short and plumitting beyond the first peak’s inception slope to inverted Middle Earth,” exaggerated another.

Extreme Bitcoin price calls claiming $1,000 is around the corner, or that $3K would break in the same manner $6K did, were great examples of how trading contrary to sentiment can work in one’s favor.

I'm Tony Spilotro. I’m an avid Bitcoin supporter and maximalist due to my distrust in society and concerns over privacy, but also a strong believer that XRP could end up being the most disruptive altcoin on the market. I’m an...

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NewsBTC is a news service that covers bitcoin news, technical analysis & forecasts for bitcoin and other altcoins. Here at NewsBTC, we are dedicated to enlightening people all around the world about bitcoin and other cryptocurrencies. We cover news related to bitcoin exchanges, bitcoin mining and price forecasts for various virtual currencies.